Noted for February 14, 2013

Al West:West's Meditations: Freedom and Non-State Societies: "I was struck by this comment [from Alex Golub]: 'Let’s face it, people living in a world without the state, bureaucracy, police, and complex networks of material culture allied with these forces (fences, locks, concrete barriers) lived in a world of much greater freedom than those of us who have passports today. If you wanted to go somewhere, you went there.' Let's face it: that contradicts everything archaeology and ethnography tell us…. The idea that there was greater freedom of movement before states arrived on the scene is contradicted by all of the ethnographic, ethnohistoric, and archaeological studies that have ever been conducted…. It is true that today, most people who live in New Guinea, eastern Indonesia, or Amazonia can travel between villages without fear of murder…. But this was not the case before states got involved…. The ability to run free in Papua New Guinea is such a product of government interference - a product of the modern state and its workings - that it would take a myopic, ahistorical approach to ignore its origins. If you wanted to go to a village in eastern Indonesia before 1915, then you had to bring gifts, maybe even a wife, for a headman in the village, or else your head would end up hanging from the sacrificial pole and your limbs would hang from the trees nearby…. If your head wasn't taken, then slavery would probably be your fate. Moreover, you would have needed a guide; almost all villages in eastern Indonesia were defended by traps…. This is a pattern found as well in 'Zomia', Scott's supposed wonderland of freedom…. [T]here would certainly be consequences to movement, and they would likely be worse than the ones people today endure… this is… found not only in the ethnographic but also in the archaeological record…"

Janet Yellen:A Painfully Slow Recovery for America's Workers: "Discretionary fiscal policy hasn't been much of a tailwind during this recovery…. State and local governments were cutting spending and, in some cases, raising taxes…. A second tailwind in most recoveries is housing…. During this recovery, in contrast, residential investment, on net, has contributed very little to growth…. Beyond the direct effects on residential investment, the extraordinary collapse in house prices resulted in a huge loss of household wealth…. Another important tailwind in most economic recoveries is one that tends to be taken for granted--the faith most of us have, based on history and personal experience, that recessions are temporary…. The recovery has also encountered some unusual headwinds. The fiscal and financial crisis in Europe."

Martin Wolf:The case for helicopter money: "When arguing that monetary policy is already too loose, critics point to exceptionally low interest rates and the expansion of central bank balance sheets. Yet Milton Friedman himself, doyen of postwar monetary economists, argued that the quantity of money alone matters. Measures of broad money have stagnated since the crisis began… broad money (M4) was 17 per cent below its 1967-2008 trend in December 2012. The US has suffered from famine, not surfeit."

John Kay:For a stimulus, boring is best: "The helicopter has landed: yet the public at large feels little benefit, sees little stimulus. The reason is that the objective of monetisation has not been to put money in the hands of consumers and businesses but to put money in the vaults of banks…. That is why these mechanisms for printing money have won plaudits rather than excoriation from the traditional defenders of sound currency. The new radicals want to give the cash central banks are creating directly to the public rather than the bankers. This makes good sense. But Sir Mervyn King, the BoE governor, explained the issue clearly in a speech at Cardiff in October last year (he went by train, not helicopter). 'I suspect that the advocates of ‘helicopter money’ and related ideas are really talking about a relaxation of fiscal policy. It would be better to be open about that,' Sir Mervyn said. It would. It would be better still to implement such a relaxation."

Atif Mian and Amir Sufi:FRBSF Economic Letter: Aggregate Demand and State-Level Employment: "What explains the sharp decline in U.S. employment from 2007 to 2009? Why has employment remained stubbornly low? Survey data from the National Federation of Independent Businesses show that the decline in state-level employment is strongly correlated with the increase in the percentage of businesses complaining about lack of demand. While business concerns about government regulation and taxes also rose steadily from 2008 to 2011, there is no evidence that job losses were larger in states where businesses were more worried about these factors."

Olivier J. Blanchard and Daniel Leigh:Growth Forecast Errors and Fiscal Multipliers: "This paper investigates the relation between growth forecast errors and planned fiscal consolidation during the crisis. We find that, in advanced economies, stronger planned fiscal consolidation has been associated with lower growth than expected, with the relation being particularly strong, both statistically and economically, early in the crisis. A natural interpretation is that fiscal multipliers were substantially higher than implicitly assumed by forecasters. The weaker relation in more recent years may reflect in part learning by forecasters and in part smaller multipliers than in the early years of the crisis."

Comments

Noted for February 14, 2013

Al West:West's Meditations: Freedom and Non-State Societies: "I was struck by this comment [from Alex Golub]: 'Let’s face it, people living in a world without the state, bureaucracy, police, and complex networks of material culture allied with these forces (fences, locks, concrete barriers) lived in a world of much greater freedom than those of us who have passports today. If you wanted to go somewhere, you went there.' Let's face it: that contradicts everything archaeology and ethnography tell us…. The idea that there was greater freedom of movement before states arrived on the scene is contradicted by all of the ethnographic, ethnohistoric, and archaeological studies that have ever been conducted…. It is true that today, most people who live in New Guinea, eastern Indonesia, or Amazonia can travel between villages without fear of murder…. But this was not the case before states got involved…. The ability to run free in Papua New Guinea is such a product of government interference - a product of the modern state and its workings - that it would take a myopic, ahistorical approach to ignore its origins. If you wanted to go to a village in eastern Indonesia before 1915, then you had to bring gifts, maybe even a wife, for a headman in the village, or else your head would end up hanging from the sacrificial pole and your limbs would hang from the trees nearby…. If your head wasn't taken, then slavery would probably be your fate. Moreover, you would have needed a guide; almost all villages in eastern Indonesia were defended by traps…. This is a pattern found as well in 'Zomia', Scott's supposed wonderland of freedom…. [T]here would certainly be consequences to movement, and they would likely be worse than the ones people today endure… this is… found not only in the ethnographic but also in the archaeological record…"

Janet Yellen:A Painfully Slow Recovery for America's Workers: "Discretionary fiscal policy hasn't been much of a tailwind during this recovery…. State and local governments were cutting spending and, in some cases, raising taxes…. A second tailwind in most recoveries is housing…. During this recovery, in contrast, residential investment, on net, has contributed very little to growth…. Beyond the direct effects on residential investment, the extraordinary collapse in house prices resulted in a huge loss of household wealth…. Another important tailwind in most economic recoveries is one that tends to be taken for granted--the faith most of us have, based on history and personal experience, that recessions are temporary…. The recovery has also encountered some unusual headwinds. The fiscal and financial crisis in Europe."